Why Men Earn More

Why do men historically earn more and have more power and influence than women? It’s a question that women have been asking for a long time.

There are many reasons for this anomaly and vigorous debate on the what and why. Therefore we will look at this from an economic perspective and the flow-on benefits for all.

On the surface, it seems that things are improving with Julia Gillard as Prime Minister in Australia and other women in positions of power in state governments. Yet a 2010 study by the National Centre for Social and Economic Modeling (NATSEM) shows that women are still being paid 17 per cent less than men on average. NATSEM’s conclusion was that the basis for the difference was simply that women were … well, women. Their report said, ‘If the effects of being a woman were removed, the average wage of an Australian woman would increase by an additional $65 per week or $3,394 annually, based on a 35 hour week.’

We can blame historical segregation of labour for most of today’s differences. Back when men and women were paid different rates for different work, it was legal for women to be paid less for doing the same work. Nowadays, differences in earnings can be attributed to workplace segregation, labour force history, and fewer women in vocational work and in large firms. It’s a situation that is taking a long time to change.

Both female biology and the undervaluing of women’s skills are used as excuses for lower wages. Their work is likely to be discontinuous, and on their return to the workforce, they are likely to restart at a lower wage and then receive fewer promotions. In contrast, men are often mentored during crucial stages of their careers and because they hold their jobs for longer than women, are more likely to be found in senior positions.

The NATSEM report states that pay inequity costs $93 billion per year to the Australian economy or 8.5% of GDP. If the wage gap were closed entirely (that is, if women earned the same as men), it is estimated grow by around $93 billion.

However, women know only too well that it isn’t that simple. Assuming that they want both a senior position at work and a family, they have to find affordable childcare and an organisation with a work structure that supports the inevitable clashes between family and career. Also, working women have to negotiate household and care arrangements with their partners, many of whom are not as supportive as they could be. The ideal is to find a company that offers flexible work options so that employees can job share or work part-time or work hours that suit them.

Although the government has implemented measures such as changes to the Fair Work Act, the law alone will not change attitudes. NATSEM’s report states that men tend to work in environments that are 61 per cent male, and women work in environments that are 44 per cent male. Places that have more men tend to promote male partners. Because they see fewer women in equal positions those women are regarded as exceptions, and few other women are appointed.

There are also implications for superannuation when women receive lower incomes throughout their working life. For women aged 35 to 55, the number of women with superannuation balances above $25,000 is well below 50 per cent, whereas more than two-thirds or more than 66 per cent of men in that age group have super balances that are over $25,000. Because women earn less, they end up with lower superannuation balances and therefore lower incomes in retirement.

The overwhelming conclusion has to be that it is better for individuals, companies and the country as a whole when men and women receive the same opportunities. What they do with them, is of course a different story.

What other ideas can you think of regarding how women can earn more money?

2 Responses to Why Men Earn More

Hello, Jon-Michail – I currently subscribe to your posts, and find them very interesting. This is the first time I’ve commented, however.
Ah, where to begin? I agree with you on most points – women leave the workforce to raise children, it has to be negotiated between the couples (usually the man makes more money, so it makes more sense as so it does biologically, without getting into detail), as well as the fact that men, traditionally, have been reluctant to allow women into their “Boys Club” for lack of a better term.
However, I think statistics are skewed a bit. What do I mean? Well, there are a lot of women today not having children or not able to have children that remain childless; therefore, while they may be included in the study or statistic, they are not singled out as a “woman’s statistic” alone. If you were to compare just those women with men of equal tenure, position, and education, I’m curious where that would leave us?
Also, of course, there is the biology factor which, as you pointed out, is not any woman’s fault, it’s simply biology. If men and women didn’t choose to have children but did, typically, women have to–biologically–care for the child regardless of her position, and that brings down the stats. I think for new mothers it’s especially overwhelming (and fathers) with the whole time off, lack of sleep, etc…However, mothers that are dedicated to their careers and go back to work as soon as possible are still taking time off for doctor runs, child’s daycare, etc…because it’s more a biological thing. It can also be a simple issue of money – He makes more, he works more. She makes less, she gives less $$ and they are happy with that arrangement, but it doesn’t help those women who are trying to still break the glass ceiling.
My point? In the USA, at least, I think we’ve come a long way towards equality in the workplace, but the facts of biology are still the facts — the woman ends up being the caregiver of the child. It’s also hard-wired into her (some more than others), so she struggles to balance both, and will usually choose in favor of her child.
I would argue that if a company here in the US would “undervalue” a woman’s skills, they had better be ready to pay the piper because there are lots of women now who aren’t afraid to speak up.
In government, I also think we’ve come a long way.
As far as a woman in a senior position who wants to juggle both work and family, I would say that each woman handles this very differently. One may make enough to hire a nanny or driver, etc…another may put her child first and her career second, so then, obviously, the stats are skewed.
I think each woman/family is so different that the stats are just not accurate, but stats are a way to point out that “Hey, women don’t make enough money” and “Hey, men are still men.” And then the clash begins…
As far as US companies who support a flexible work schedule? It depends on 1) the company 2) the woman (is she willing to speak up to her boss? is the environment agreeable to it?) 3) her child (is that child healthy? have special needs? have health issues?)
While a company may be outwardly supportive (and as I’m sure you’ve found in your own working experience), the “under the radar” environment of that same company may NOT be supportive of a flexible work schedule.
Plus, even if you are gone, come back, people will not remember the time you’ve served at the company, they tend to remember when you weren’t there, thereby electing the next person to that senior position. The facts are the facts. It’s a business. It’s there to make money. Sorry, that’s true.
As a manager, I sympathize, but I have to do what’s best for the company. It’s not personal.
Good post. Thanks for sending it out ~ AMS